From the “I Don’t Think So” Department:

(Hillary Clinton) is in danger of losing all four early contests, including Nevada and South Carolina – probably to Sen. Barack Obama, who is now, in momentum terms, the Democratic frontrunner.

Drudge yesterday linked to another article about Mrs. Clinton asking “Is It the End?” That’s an alltime record for premature e-celebration or premature e-desolation, depending on your point of view.

It’s possible that it really looks that bad for her. But given Fineman’s and his magazine’s bootlick-level support of the Clintons over the years, I believe this is an orchestrated attempt at expectations management (yes, with a dash of desperation) — to be (she hopes) followed by “The Comeback Kid,” Part II.

Interestingly, and contrary to popular folklore, the PBS “Comeback Kid” link does NOT give any credit to Hillary for coming up with Part I.

Update: More expectations management — Bill Clinton told Charlie Rose Friday night that “It’s a miracle she even has a chance” to win in Iowa.

______________________________________

Having said that, Hillary definitely did not have a comeback for this (a YouTube vid with just the exchange below is here. A NewsBusters link to longer vid is in third para at this post, where the sequence below is near the very end. The rest of the NB clip is worth watching, just to see Mrs. Alan Greenspan [Andrea Mitchell] and Tim Russert piling on the Clinton campaign):

Carolyn Washburn (Worst debate moderator — ever — twice): Senator Obama, you have Bill Clinton’s former national security adviser, State Department policy director, and Navy Secretary, among others, advising you. With relatively little foreign policy experience of your own, how will you rely on so many Clinton advisers and still deliver the kind of break from the past that you’re promising voters?

BOOHOO (Barack O-Bomba Overseas Hussein “Obambi” Obama): Well, the uh, you know, I am …..

(interrupted by extremely loud and sustained Hillary Clinton-patented “ooh, she got him with that one” cackle)

Hillary Clinton (with taunting “going in for the kill” tone): I want to hear that!

(followed by extremely loud and even longer-sustained Hillary Clinton-patented “ooh, now we’ve got him by the short ones” cackle)

BOOHOO: Well, Hillary, I’m looking forward to you advising me as well.

(sustained laughter and applause)

BOOHOO: I, I, I want to gather up talent from everywhere.

This may be BOOHOO’s “Where’s the beef?” moment.

______________________________________

The same New York Times that did its part for fauxtography is now propping up a faux spokesperson (HT Instapundit).

In totally related news, NYT stock, which closed at $26.55 on June 8, closed Friday at $16.53. That’s a loss of over $1.4 billion in market value in five months. Roughly 5-1/2 years of Bush Derangement Syndrome has exacted a terrible price.

______________________________________

Though I can’t find a link (typically annoying — the CNNMoney April 16 original isn’t there), I thought Alan Greenspan promised, after the last go-round, to lay low on offering what are now no more than the observations of an educated but well-informed outsider whose influence is beyond what is justified. But he didn’t.

Alan, have you ever asked yourself how YOUR predecessor, Paul Volcker, managed to zip it during and after that 508-point market plunge (a one-day, 22.7% decline) on October 19, 1987 during your watch? And, more importantly, why he zipped it?

______________________________________

I never knew Triticale, and he never knew me. I just looked it up; he posted 47 comments here over two-plus years. He passed away on Thursday (HT Jay via Instapundit). I will miss his “rye” style, and offer prayers for the repose of his soul, and his family.

Megan McArdle, one of those sitting in for Instapundit for a few days, calls attention to this stunner (I/B/E/S is the “Institutional Brokers Estimate System“):

Comparing two snapshots of the entire historical I/B/E/S database of research analyst stock recommendations, taken in 2002 and 2004 but each covering the same time period 1993-2002, we identify tens of thousands of changes which collectively call into question the principle of replicability of empirical research. The changes are of four types: 1) The non-random removal of 19,904 analyst names from historic recommendations (“anonymizations”); 2) the addition of 19,204 new records that were not previously part of the database; 3) the removal of 4,923 records that had been in the data; and 4) alterations to 10,698 historical recommendation levels. In total, we document 54,729 ex post changes to a database originally containing 280,463 observations.

Maybe there’s a perfectly acceptable explanation for an after-the-fact alteration rate of almost 20%, but until I hear it, it’s hard not to think that there is quite the contingent of “grown up” David Lightmans (the main character in the 1983 movie “War Games,” played by Matthew Broderick, who, among other things, hacked into his high school’s computer system and changed his grades) systematically rewriting their history. And I’d not only like to ask the Watergate question (”What did they know and when did they know it?”) of industry CEOs during that period, I’d like to know (again, if this really is abusive history rewriting) what they’re going to do to stop it now — AND to put things back to where they were.

Life News has the details about the true “nature” of the corrections (plural) issued by medical journal Nature regarding what it published in conjunction with the “no embryos harmed” announcement of Advance Cell Technology Inc. (ATC) last week (bold is mine):

Nature Issues Corrections on Misleading Embryonic Stem Cell Research Study
August 31, 2006

Washington, DC (LifeNews.com) — A leading medical journal has issued two “corrections” regarding misleading news releases concerning a study conducted by a biotech firm claiming to have created a morally acceptable method of obtaining embryonic stem cells.

Though Advanced Cell Technology said no human embryos were destroyed, in fact all were killed.

A press release from ACT and a statement from Nature on the article it published about the new method both said no human embryos were destroyed.

Ruth Francis, Nature’s senior press officer, explained the need for the corrections in an email to media outlets.

“We feel it necessary to explain that … the embryos that were used for these experiments did not remain intact,” she said.

Later, Francis would not tell the Philadelphia Inquirer why Nature didn’t make that clear in its initial press statement about the ACT paper.

“We are looking into the possibility of further clarification of this paper,” she told the newspaper.

During an interview with the Inquirer before the controversy erupted about the false claims, Advanced Cell Technology vice president Robert Lanza, senior author of the research paper, told the newspaper that “some of the embryos survived and were returned to frozen storage.”

On Wednesday, in a follow-up interview with the newspaper, he said he was referring to human embryos used in similar experiments, but not the ones touted in the Nature article he wrote.

Gee, I’m no scientific expert, but the last two paragraphs sure make it appear that ATC VP Lanza was caught red-handed playing fast and loose with the truth. There’s a three-letter word for that. And Nature may not even be done cleaning up Lanza’s mess.

_________________________________

UPDATE, Sept. 1: California Stem Cell Report has advice for ACT on effective and accurate PR. With all due respect to CSCR, I believe ACT knows exactly what it is doing, and has thus far gotten what they want out of the whole episode.

UPDATE 2, Sept. 1: ACT stock had a recovery day Friday, closing up 10 cents at 71 cents after being as low as 56 cents during the trading day. ACT was down 25 cents (about 26%) for the week. The stock’s recovery may be due to the company fighting back a bit about its work, complete with the seemingly-required Bush-bashing:

Company officials protested that the fate of embryos in their laboratory has no bearing on the scientific value of the research that comes out of it. Using the techniques they developed, they said, future researchers can create stem cells without destroying embryos.

Having such a capability could be useful because U.S. law currently bans federal funding of any research that harms human embryos. In an August 2001 decision, President Bush allowed federal funding for research on the few dozen cell lines that had been created up to that point. But researchers say they need hundreds of lines to move the science forward.

“I think the degree of protest here is the result of the importance of this breakthrough,” said Ronald Green, chairman of Advanced Cell Technology’s ethics advisory board and a professor of religion at Dartmouth College. “If the president were to turn around tomorrow and authorize stem cell lines produced in this way, in two years’ time we could have three to four hundred stem cells lines.”

Other scientists have expressed reservations about the significance of the research, saying that it needs to be confirmed through replication.

Correct me if I’m wrong, but Green conveniently forgets to mention that he and others in the industry can develop all the lines they wish — they just can’t do it using federal funds.

_________________________________

Previous Posts:

- August 27 — Paging the SEC: Investigate Advanced Cell Technology

- August 28 — An Across-the-Board Chorus Blasts Advanced Cell Technology’s Claims

Because of a cranky Internet connection, a post of a few short items will have to do for the rest of the day:

• Gee that was quick — Don Wildmon’s American Family Association is calling for a letter-writing and phone-call campaign to protest Wal-Mart’s aggressive “gay-friendly” initiatives earlier this week. In case the Bentonville bunch missed it, he reminds them that what they’re doing is similar to what Ford, who AFA is boycotting, has done.
• Advanced Technology Inc. (symbol ACTC) is the company BizzyBlog thinks should be investigated by the SEC because of very irregular-appearing trading action both before and after its “no harm to embryos” research announcement, and because an across-the-board group of prolifers, pro-embryonic stem cell researchers, and people with contacts in the investment community all believe that the company overhyped what it had accomplished. As feared, the share price of ACTC has nosedived from 96 cents at the start of the week to 61 cents as of about 2:55 PM Thursday — a drop of over 36%.
• Mortgage interest rates have gone down six weeks in a row. (MarketWatch link requires free registration).
• Add up the five months at this link from the Bureau of Economic analysis, and you realize that personal income is up about 2.7% during that time — way more than inflation.
• Ignoramus of the Day — Jack Cafferty of CNN, who sees a Bush/Rove conspiracy ….. in the fall of gas prices.
• Post of the Day — “Americans Hate Their Fabulous Economy” (HT Instapundit). It has great charts showing that the only meaningful difference between the economies of 1996-1999 and 2003-2006 is how people feel about them.

Resist the urge:

While most people know better than to buy a stock based on a spam message, there are clearly enough suckers out there to make it worthwhile. A new study has checked in on the numbers, doing a bit more academic version of the portfolio tracker above. They found that (as you would expect) people who invest in stock that was spammed tend to lose money. However, the people (the spammers) who bought the stock a day or two before the spam tend to make a decent return (sometimes depending on how proficient they are as spammers). While this certainly fits into the “no duh” category of things for most of us, it’s still fascinating to see that there are enough gullible folks out there who actually buy stock based on spam.

Don’t be one of them.

Specifically, the BBC reports that:

People who respond to the “pump and dump” scam can lose 8% of their investment in two days.

Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell.

The study recently published on the Social Science Research Network say their conclusions prove the hypothesis that spammers “buy low and spam high”.

The researchers say that approximately 730 million spam e-mails are sent every week, 15% of which tout stocks. Other estimates of spam volumes are far higher.

My estimates of total spam volumes would be much higher too. Sometimes I think half of the volume noted comes into my mailboxes.

Previous Post: Paging the SEC: Investigate Advanced Cell Technology

____________________________________________

Note: This post originally appeared at 8:25 this morning.
It will be kept at the top for the rest of Monday.

____________________________________________

Opponents of life-destroying Embryonic Stem Cell Research (ESCR) have vocally spoken out about both the legitimacy and purported moral acceptability of the research claims made by Advanced Cell Technology, Inc. (ACT) in its announcement last week that it had “Generate(d) Human Embryonic Stem Cells that Maintains Developmental Potential of (the) Embryo.”

Objections from the Catholic Church and the prolife community might be seen by some to have been predictable. But that doesn’t explain why pro-ESCR scientists are also blasting ACT’s work and its claims.

From Life News (links within excerpt were added by me):

Catholic Church, Scientists Say New Embryonic Stem Cell Research Claims False

In a rare agreement on the thorny issue of embryonic stem cell research, the Catholic Church and scientists who back the destructive research both agree that a California biotech firm’s claims of creating a new method of obtaining embryonic stem cells without taking human life are false.

Art Caplan of the University of Pennsylvania, one of the top embryonic stem cell research advocates in the United States, called the claims “all hype.”

Advanced Cell Technology published a paper last week in the journal Nature claiming to have used the single-cell biopsy technique called Preimplantation Genetic Diagnosis (PGD) to obtain stem cells from 16 human embryos. However, further examination shows all 16 of the days-old unborn children died in the process.

“The science involved is not going to lead to any sort of ethical breakthrough,” Caplan wrote in an op-ed over the weekend.

Caplan said the cells ACT obtained may not act like embryonic stem cells obtained by the traditional method of killing human embryos. He also said couples would be reluctant to donate human embryos for the research and that the cells may only come from embryos with physical handicaps.

“Ultimately this so-called ‘breakthrough’ does little to quiet the critics of embryo destruction or the proponents of stem cell research using human embryos, such as myself,” he explained.
“What we have here is hype, not hope,” he added.

Top Stanford University researcher Hank Greely agreed.

“From the scientific perspective, never believe anything until it’s replicated several times,” he said. “It will be interesting and important to see if these cells turn out to be the same kind of cells with the same kind of promise as [embryonic] stem cells derived [traditionally].”

We can also add people with some knowledge of the investment community and the ESCR industry to those who don’t believe that ACT has accomplished anything significant. ACT was discussed on last Thursday’s public radio program “Marketplace,” (ram-format audio is at link). This is a program that I am nearly certain airs AFTER the markets close. Assuming I’m correct, following a day in which ACT shares opened at $2.30 and closed at $1.60, a fall over 30% over the course of one trading day, ethicist Glen McGee and Tufts University’s Jan Reichert both expressed severe reservations about the company’s claims:

CLENN MCGEE: Investors just aren’t buying it. I mean they don’t believe this kind of discovery is going to set Advanced Cell Technologies apart and they shouldn’t.

HELEN PALMER (Marketplace reporter): Jan Reichert of Tufts University says ethical issues aren’t the only problem. Stem cell therapy just isn’t ready for prime time.

JAN REICHERT: It’s not being picked up either by biotech or by the major pharmaceutical firms simply because the end use of them is not quite clear yet.

PALMER: Reichert says stem cells need five more years of basic research before venture capitalists will see enough returns in therapies and dollars to tempt them to invest.

Hmm. Somebody DID invest on Friday, two days after ACT’s announcement. Were they fooled?

And a whole lot of people must have thought that the “discovery” would “set ACT apart” on Wednesday (and maybe Tuesday, based on the day-before share price jump of over 50%), only to see the walls come tumbling down on Thursday and Friday (NASDAQ link is here; chart will change when the markets open on Monday):

According to NASDAQ’s web site, ACT has 27.7 million shares outstanding. Note that Wednesday’s, Thursday’s, and Friday’s trading volumes were 32%, 56%, and 36% of the company’s outstanding shares. The company’s 10/31/05 Proxy Statement (PDF; go to Page 5) shows that at that time, officers and directors of the company owned 22% of the company, and fund companies owned another 51%.

The chances that there is something fundamentally not right about all of this, and that financiers and/or public shareholders have been snookered, have to be seen as more than minor. The charges against ACT are not just coming from supposed moral puritans; they’re coming from just about anyone who invests a minimal amount of time looking into what’s being claimed vs. what has really been accomplished.

As I wrote Saturday:

If you think there’s more than a little reason to suspect that the investment funds, the officers, and/or the directors of ATC may have made a financial killing as a result of manufactured (and if Smith is right, now thoroughly punctured) hype at the possible expense of unjustifiably overexcited individual investors — well, so do I.

Earth to SEC: Investigate ACT. You might even consider having someone watch the airports and the borders.

______________________________

UPDATE: ACT stock (symbol ACTC) closed at 89 cents on Monday, down 7 cents, or 7.3%. Tuesday’s close: 86 cents. Wednesday at noon: 80 cents. Wednesday’s Close: 78 cents (a 3-day, 18.75% haircut).

UPDATE 2, Sept. 7: Michael Fumento gets in his rips, and they’re good ones:

For all the media mania, you’d never know the Lanza publication was just a 200-word letter that spent as much verbiage on theory as actually describing the experiment. As such, Nature had no business running it.

But as I’ve written elsewhere, Nature has long boosted embryonic stem cell (ESC) technology generally and the lifting of federal funding restrictions specifically, as has its American counterpart Science. Their eagerness to run anything promoting this view recently led to Science being forced to withdraw not one but two “ESC miracle breakthrough” articles.

August 28 Follow-up post –
An Across-the-Board Chorus Blasts Advanced Cell Technology’s Claims

____________________________________________

NOTE: The post below, which originally went up at 4 PM on Saturday, has been carried forward, and will stay near the top for the rest of Sunday.

____________________________________________

Was Advanced Cell Technology Inc.’s Embryonic Stem-Cell Announcement
a Political Ploy, a Financing Gambit, or “Pump and Dump”?

OVERVIEW: Advanced Cell Technology’s Wednesday announcement that it had generated human embryonic stem cells without harming embryos appears to be suspect, and to fit the company’s historical pattern of overhyping things that turn out to be minor developments or non-developments. This time, though, as a publicly-traded company, its announcement, if debunked or deeply discounted (there are many signs that is indeed taking place), may not only impact the ongoing debate over the relative merits of embryonic vs. adult stem cell research, but may put the company in financial jeopardy.

_______________________________________

This brief news item was posted yesterday in the San Francisco Bay Area’s weekly business paper, The East Bay News Business Times (bolds are mine throughout this post):

Advanced Cell Technology raises money after stem cell news
East Bay Business Times - 1:55 PM PDT Friday

Just two days after reporting it had developed a new way to generate human embryonic stem cells, Advanced Cell Technology Inc. said it had commitments to raise about $13.5 million.

The Alameda company (OTCBB: ACTC) said most holders of debentures and warrants to buy its stock agreed to exercise their options to buy more. Advanced Cell Technology will raise about $8.5 million that way.

The company will also exercise some of its outstanding warrants to raise another $5 million.

Because of the new agreements, Advanced Cell Technology canceled a proposed private placement through which it had hoped to raise about $11.3 million.

The company said Wednesday that its scientists generated human embryonic stem cells without harming embryos.

Earlier this week, Advanced Cell Technology Inc. (ACTC) announced that:

“….. company scientists have successfully generated human embryonic stem cells (hES cells) using an approach that does not harm embryos.”

….. “Until now, embryonic stem cell research has been synonymous with the destruction of human embryos,” stated Robert Lanza, M.D., Vice President of Research & Scientific Development at ACT, and the study’s senior author. “We have demonstrated, for the first time, that human embryonic stem cells can be generated without interfering with the embryo’s potential for life. Overnight culture of a single cell obtained through biopsy allows both PGD and the development of stem-cell lines without affecting the subsequent chances of having a child. To date, over 1,500 healthy children have been born following the use of PGD.”

Current technology derives hES cells from the inner cell mass of later-stage embryos known as blastocysts, destroying their potential for further development. ACT’s approach generates human embryonic stem cells from a single cell obtained from an 8-cell-stage embryo.

If those making the financing commitments haven’t finished their due diligence yet and still have time and the ability to back out, they might consider reading what Wesley Smith (bio here; blog here), a senior fellow at the Discovery Institute and a special consultant to the Center for Bioethics and Culture, found and reported in his most recent Weekly Standard column (HT Life News):

Science by Press Release
More hype from stem cell entrepreneurs

“NEW STEM CELL METHOD avoids destroying embryos,” the New York Times headline blared. “Stem cell breakthrough may end political logjam,” chimed in the Los Angeles Times. “Embryos spared in stem cell creation,” affirmed USA Today. Reporting the same supposed scientific achievement by Advanced Cell Technology (ACT), the Washington Post quoted the company’s bioethics adviser Ronald Green: “You can honestly say this cell line is from an embryo that was in no way harmed or destroyed.”

Unfortunately, you can’t “honestly” say that. The above headlines–like Green’s statement and innumerable similar press accounts around the world–are just plain wrong. While ACT did indeed issue a press release heralding its embryonic stem cell experiment as having “successfully generated human embryonic stem cells using an approach that does not harm embryos,” the actual report of the research led by ACT chief scientist Robert Lanza, published in Nature (abstract is here; page also contains link to report, which costs $30, and which I did not purchase — Ed.; Aug. 30 update — Just to be clear, SMITH DID read the Nature report, and I’m relying on his work and considerable reputation), tells a very different story. In fact, Lanza destroyed all 16 of the embryos he used, just as in conventional embryonic stem cell research.

And that’s not the only facet of Lanza’s work that the press got wrong. The ACT team did do something new: It worked with very early embryos, of 8 to 10 cells each, rather than the 100- to 200-cell blastocysts usually used in such research. From each of these early embryos, the scientists removed not one cell–as several press accounts reported–but 4 to 7 cells. This misreporting is important because it creates a materially false impression.

During in vitro fertilization of an egg, a single cell can be removed from a very early embryo like those Lanza used in his research. Usually this is done for genetic testing, before the embryo is implanted in the mother, and the embryo remains viable–unlike Lanza’s embryos. Lanza did, however, derive two lines of embryonic stem cells from some of the early cells he had removed. Maybe one day someone will succeed in making stem cell lines from an early embryo that survives, but Lanza didn’t. ACT and the media–in their desire to boost popular support for embryonic stem cell research–simply took a leap of faith and portrayed an experiment showing that something might be possible as if the feat had already been accomplished.

….. Lanza’s experiment does demonstrate that stem cell lines can be obtained earlier than previously thought. But that wasn’t good enough for ACT’s publicity office or the lazy reporters who regurgitated the press release. The failure to report this story accurately amounts to massive journalistic malpractice–and once again ACT is laughing all the way to the bank.

Elsewhere in his column, Smith chronicles ACT’s sordid history of faux breakthroughs:

• A December 3, 2001 cover story by US News that ACT had cloned human embryos, when all it had done was to divide a human egg a few times without getting it to the point of being a viable embryo.

• A mid-2002 story in Atlantic Monthly about ACT’s attempts to “create a cloned embryo of a young boy named Trevor,” in the hopes of curing a rare disease in the boy. Says Smith: “In reality, of course, there was never any hope of treating Trevor with cloned embryonic stem cells.”

• In January 2004, Wired Magazine reported that led readers to believe that ACT’s Dr. Lanza “had successfully grown cloned human embryos to the 16-cell stage.” Says Smith: “This would have been big news–if it had been verified. But it never was. To my knowledge, Lanza never subjected his work to peer review or published a report of it in a respected science journal.”

Additionally, I located this CNN story from November 25, 2001, published shortly after “cloned human embryos” announcement (the “December 3″ issue of US News would actually have been published about two weeks earlier). Among other things, it chronicles a four-year history of press releases and announcements that, in retrospect, look more than a little dubious.

Let’s say that ACT is indeed conducting overhyped (and worse) “Science by Press Release,” as Smith alleges and as it appears to have done in the past. There are three big potential problems with what it is doing; one of them appears to be old hat to the company, but the other two represent problems that, because it is now a publicly-traded company, may threaten its very existence.

First, ACT, as it has been for many years, is feeding into what Smith, myself, and many others believe is the myth that life-destroying embryonic stem cell research (ESCR) has potential for curing disease that non-life-destroying adult stem cell research (ASCR) won’t achieve. The contention that ESCR will in the long run accomplish more than ASCR is being proven more tenuous almost with each passing day. In fact, it can fairly be argued, based on this report from last year (”Adult cells found in mice can transform like embryonic ones”) and this one from just a couple of days ago (”Researchers create adult stem cells with embryonic cell features”) that ASCR is moving out of what I referred to in late 2005 as “blocking-and-tackling,” or addressing diseases one at a time, to something with every bit of the potential that ESCR cheerleaders, without substance, still try to claim as their own. By feeding what I believe are the false hopes for ESCR, ACT and other boosters are causing companies, politicians, and voters (see California) to misallocate money to the “Hail Mary pass” that ESCR represents that could have been more productively spent achieving speedier and genuine results with ASCR. It’s not too much of a stretch to say that some people may die needlessly and/or prematurely if funds continue to be misallocated; just because we can’t find the specific bodies doesn’t mean that it isn’t happening, or might not happen.

The poisoning of the stem-cell debate with false hopes for ESCR is bad enough. But the second problem goes back to the beginning of this post, to that $8.5 million the company just announced that it will raise from holders of its debentures and warrants. If those holders are putting in their money based on the company’s press releases and the subsequent hyped-up reports in the press that are not supported, there would seem to be three parties with the potential to take legal action. The holders themselves could claim deception, though presumably, as accredited investors, they’re supposed to be big boys and girls and have the responsibility to do all the necessary digging before investing. Existing public shareholders who are being diluted could take also action if they feel that the company’s hype falsely induced the debenture and warrant holders to dilute shareholders’ interests. Finally, the Securities and Exchange Commission (SEC) might decide that the entire matter requires investigation for all the reasons I just described.

Speaking of the SEC — The third potential problem is one that, if there is reason to suspect it, you would normally expect the Commission to take a very keen interest in — namely, whether ACT’s announcement, if debunked, represents a PR- and news-driven example of “pump and dump” designed to benefit insiders and perhaps others “in the know.”

On the surface, the evidence looks, to put it delicately, less than pristine:

The last few day of the graph are tough to read, so let’s look at the numbers (you can click on the graph at the link to see this at NASDAQ’s site):

The press release was issued on August 23. The stock went up over 50% the day before and volume doubled, indicating that a number of people may have been given the scoop about the pending announcement. The stock went up over 350% ($1.43) on the 23rd, opened another 57 cents higher ($2.30) on the 24th, peaked slightly above that opening, and fell with a thud to $1.60 by the end of the day. The free-fall continued on Friday, to the point where by Friday’s close the stock was down 59% from its Thursday intraday peak. I don’t have a crystal ball, but given the snowballing skepticism, I’d say the chances that the slide will continue on Monday are pretty high.

What about those huge trading volumes on Wednesday, Thursday and Friday? Keep in mind that the company has, according to NASDAQ’s web site, only about 27.7 million outstanding shares. Even considering that some shares probably changed hands multiple times during those three days, the share volumes as a percentage of outstanding shares are extraordinary, especially when you see who owned most of the shares as of October 31, 2005 (link is to the Proxy Statement filed December 5, 2005; info pictured below is at Page 5; I did not see evidence that ownership has significantly changed since then, but I am not certain of that; I’d appreciate an e-mail from anyone who can point me to more current information):

Add the 22.1% of the company owned by officers and directors to the 51% owned by the the four investment funds, and you see that together they own almost 3/4 of the company. Trading volumes for ACT stock on Wednesday, Thursday and Friday were 32%, 56%, and 36% of the total shares outstanding, respectively.

If you think there’s more than a little reason to suspect that the investment funds, the officers, and/or the directors of ATC may have made a financial killing as a result of manufactured (and if Smith is right, now thoroughly punctured) hype at the possible expense of unjustifiably overexcited individual investors — well, so do I.

I will politely suggest that if the SEC isn’t curious about all of this, they’re not doing their job.

____________________________

UPDATE 1: Here’s another great example of adult stem cell progress.

UPDATE 2: There may be even more machinations involved than the body of the post indicates. First, ACT earlier this year opened a California R&D facility, because they hope to get some grant or venture funding from the $3 billion kitty California voters approved in 2004. Don’t ask me why, but an announcement like ACT’s, even if disproven, could still give the company visibility and credibility with those who are divvying up the money. Second, most of ACT’s principal executive officers have a large number of stock options, which, if exercisable (many appear to be) and actually excercised during the stock runup, could have personally benefitted them in very substantial amounts. There certainly may be other angles I’m not considering but don’t have the ability to investigate because of the company’s complex capital and financing structure.

UPDATE 3: The paragraph below the “daily details graphic” was added at about 5:30 PM on Saturday, and the percentages owned by the funds and all insiders were changed at that time to correct math errors.

UPDATE 4: In an article about the company after the markets closed on Friday, Steve Johnson at the San Jose Mercury News did not address any of the matters noted above, even though doubts had already emerged about the credibility of ATC’s announcement.

UPDATE 5: Yoo-hoo? SEC? — The Washington Post is reporting (HT Instapundit) on several objections from Richard Doerflinger of the U.S. Conference of Catholic Bishops, and that Nature Magazine “corrected wording in a lay-language news release it had distributed in advance and posted clarifying data it had asked the scientists to provide.”

UPDATE 6: Newsweek didn’t let concerns about the ATC announcement’s validity keep it from polling on the matter, including whether the President should “change his position given the new method.” Zheesh — Bush’s position, not specifically explained by Newsweek, is that federal funds should not be used to fund ESCR. The writing is typically ignorant and biased. The sub-headline is “NEWSWEEK Poll: A possibly revolutionary innovation in stem-cell research hasn’t changed American opinions on the topic.” As usual, no distinction between embryonic and adult. The word “embryonic” appears once. The word “adult” to describe stem cells or stem cell research does not appear at all. A less-than informed reader would concude that ESCR is the only kind.

UPDATE 7, August 28 afternoon: Mona Charen has a short post at The Corner on an e-mail she received from one Robert P. (Robby) George (July 6 WaPo co-authored op-ed here; HT Mirror of Justice), who she quotes thusly — “Unfortunately, just about none of this is true. First, the study did not involve the removal of one cell from an embryo that then continued to develop. Instead, researchers disaggregated 16 living embryos, killing them all, and took an average of six cells from each. The 91 resulting embryonic cells were then placed near one another in dishes and allowed to divide. Some divided, while others died, and from the cells that divided researchers were able to produce two lines of embryonic stem cells. In other words, this study does essentially nothing to prove the point that Advanced Cell Technology (the company that carried out the experiments) has argued in the press: that single cells removed from an early embryo and cultured by themselves can produce lines of embryonic stem cells.” Mr. George is McCormick Professor of Jurisprudence, a Professor of Politics, and Director of the James Madison Program at Princeton University.

UPDATE 8, August 28, 1AM: Life News — “Company Making Millions on Fake Embryonic Stem Cell Research Announcement”; also, here is a detailed, unfiltered report from Catholic News Agency of exactly what Doerflinger (mentioned in Update 5) said about ACT’s work. August 28, 2PM — Here is the USCCB’s official press release.

Did you know Congress is partially responsible for the scandalous runup in CEO pay?

Yup. By capping the deductibility of officers’ salaries at $1 million, companies who wanted to retain talent had to come up with creative ways of delivering compensation. (BTW, why are CEO salaries any less deductible that those of professional athletes and entertainers?)

This led to a widespread increase in the use of stock options. If a CEO did a great job, he or she could, and thanks to the great markets of the mid-1990s sometimes did, make tens of millions of dollars by exercising them.

Enter the mostly yucky markets, relatively speaking, of the last 6 years. Companies still need to have their CEOs around, yet don’t want to pay any more non-deductible salary than they have to (Shouldn’t the $1 million should at least be indexed to inflation?). Some boards have cut corners by backdating CEO options to dates when the company’s stock price was lower, enabling the CEO to make a profit, or more of a profit, when he or she exercises. This is a move that almost certainly isn’t legal (many criminal probes are in progress) and is a breach of fiduciary duty to shareholders.

But it all goes back to the fact that companies are not able to simply pay out deductible compensation, as The Wall Street Journal noted in a subscription-only editorial last weekend:

Which brings us to Congress, the villain of this tale that the rest of the press corps wants to ignore. Executive greed is an easier story to sell, we suppose. But the same Members of Congress who most deplore big CEO paydays are the same ones who created the incentive for companies to overuse options as compensation.

In 1993, amid another wave of envy over CEO pay, Congress capped the tax deductibility of salaries at $1 million. To no one’s surprise except apparently the Members who passed this law, most CEO salaries have since had a way of staying just below $1 million year after year. But because companies still need to compete for and retain top talent, they have found other forms of compensation — notably stock options.

And one of the problems with options is that they give executives every incentive to capitalize all company profits back into the stock price — thus contributing to their own pay — rather than paying out dividends to shareholders. As SEC Chairman Chris Cox has noted, the 1993 law deserves “pride of place in the museum of unintended consequences.”

In a better world — one in which Congress kept its nose out of wage decisions — corporate directors could pay the salaries they wanted and wouldn’t rely so much on options to motivate executives. This, in turn, would reduce the incentive for companies to stoop to such dubious pay practices as option backdating. But as long-time observers of Washington, we can say with certainty that backdating will cease as a corporate practice long before Congress admits its mistake.

UPDATE: This MarketWatch article in IBD has a lot of noise about how the backdating of options, which mostly occurred between 1996 and 2002, would not have taken place if Sarbanes-Oxley had been in effect. Give me a break - the ability to detect the backdating goes back to 1992, thanks to rules on executive compensation mandated by the Bush 41 SEC. Nice try, no sale. If SarBox increased disclosure in this area, great, but SarBox fans know darn well that the tedious and mostly-worthless mandated extra internal control work brought about by Section 404 is where all the contention is.

So who should care what anti-economic growth co-conspirator Mike Oxley (alleged R-OH) has to say (Investment News link requires subscription) about the verdicts?

“Justice has been served today,” said the Financial Services Committee chairman in a statement released shortly after the verdict was handed down.

“The entire debacle reminds us of the need for The Sarbanes-Oxley Act to help reinforce the duties of company directors and officers.”

The verdicts of course prove no such thing. They prove that the system worked before SarBox. It remains to be seen how it will work after it.

From CNN Money:

Fannie report lays blame at the top

WASHINGTON (Reuters) - Fannie Mae’s “arrogant and unethical” corporate culture led employees to massage earnings to trigger bonuses for senior executives, and the board of directors contributed by failing to act independently, the company’s regulator said Tuesday.

The U.S. Office of Federal Housing Enterprise Oversight, in its report on Fannie’s nearly $11 billion accounting scandal, said it was going to announce a settlement with the mortgage finance giant. Sources have said the settlement would total $400 million.

“A combination of factors led Fannie Mae senior management, through their actions and inactions, to commit or tolerate a wide variety of unsafe and unsound practices and conditions,” the report said.

“Fannie Mae’s board of directors contributed to those problems by failing to be sufficiently informed and to act independently of its chairman, Franklin Raines, and senior management, and by failing to exercise the requisite oversight over the enterprise’s operations.”

If this were an ordinary public company, it would have been delisted and shut down long ago.

And is anyone going to demand that Frank Raines return his ill-gotten gains? This article makes it clear that “clawbacks,” the term used for trying to recover bonuses subsequently determined to be undeserved, are difficult to achieve.

Related item:

More accounting woes for Fannie Mae
Mortgage finance company said the restatement process will likely cost more than $800 million this year.
May 9, 2006

Fannie Mae, which is still investigating $11 billion worth of accounting problems, Tuesday said it identified new errors in two areas, but that it still expects to meet capital requirements set by regulators.

The company also said it has substantially completed its analysis of accounting problems, and the restatement process will likely cost more than $800 million this year.

If I’m reading this correctly, Fannie Mae is spending $800 mil just to correct its records (if I’m not reading it correctly, it’s very poorly written copy).

The idea that the mortgage market is more than a little dependent on the continued existence of Fannie Mae is a scary thought indeed, and that has nothing to do with whether or not the housing market is overvalued.
_________________________

UPDATE: This first para from the AP report is much more on point –

Employees at mortgage giant Fannie Mae manipulated accounting so that executives could collect millions in bonuses as senior management deceived investors and stonewalled regulators at a company whose prestigious image was phony, a federal agency charged Tuesday.

UPDATE 2: Announced just after 11 AM, from a subscriber link at The Wall Street Journal — “The report from the Office of Federal Housing Enterprise Oversight, or Ofheo, came as the mortgage-finance company prepared to announce a settlement with Ofheo and the Securities and Exchange Commission under which Fannie is expected to pay a fine of about $400 million.” Remind me again why Frank Raines’ bonuses shouldn’t be recovered. Also, here is a free Reuters link at the ABC News web site.

UPDATE 3, May 24: The Business & Media Institute notes that only CBS covered the story in its evening newscast, and even they failed to note the Democrat Party connections of its former leading lights. BMI characterizes Fannie Mae as the “government-sponsored Enron,” and it’s hard to disagree with them.

Free Links:

• This is a Sirius Slump (as of close on March 14) — Note that Howard Stern collected his big payoff on January 5, and the company announced Stern could sell his shares any time he wanted (i.e., that he is, incredibly to me, not considered an insider) on January 11.



March 20 update: Kevin at Pundit Review notes the plenitude of insider selling and stock option redemptions — with no buying. Many financial advisers would suggest that when insiders are heading for the exits, even when the stock is already in the tank, you should join them.

• The Japanese Have Developed a Robot That Can Carrya 20-Plus Pound Person (HT Drudge, if it’s still there) — “Government-backed research institute Riken said the 158-centimeter (five-foot) RI-MAN humanoid can already carry a doll weighing 12 kilograms (26 pounds) and could be capable of bearing 70 kilograms within five years.” I guess it will just need the proper diet and workout regimen. :–>
• Michiganders, How Did You Let This Happen? — U.S. Senator Debbie Stabenow was last seen on these pages supporting the “Bankruptcy Reform” bill last year, earning her the moniker “Democrat Senator from GMAC.” In this picture from earlier this week she appears to be flaunting her most obvious trait, but at least she’s color-coordinated:

  

  (I should never have delayed posting this 24 hours. Now I’m the 10,245th person to post this picture — Ed.)

• This Is a License to Print Money — Apple is offering college basketball fans a chance to download the games or game highlights through its online iTunes Music Store. Something tells me that a partnership with ESPN to get classic NCAA tournament games and other classic sports events isn’t far off. One example: I’d say the list of Duke fans who won’t purchase the Christian Laettner buzzer-beating double overtime game against Kentucky in 1992 will resemble a blank piece of paper — as will the list of buyers in The Bluegrass State.

This first entry in the Stock Schlock category, which is intended to track the results of the investments touted in junk e-mails (so you don’t have to, and so you won’t be taken in by them), actually doesn’t relate to a specific stock at all.

That’s because of the imbeciles who sent me the following e-mail (shown in part below). Next time, guys, change your boiler-room form letter before hitting the Send key:

%SYMBOL
PRICE:$0.08
“A Premium Market Related Service”
Attn: Subscribers, Stockbrokers, Analysts & %INVESTOR %ALERT

CORAL SPRINGS, Fla.–(BUSINESS WIRE)–May 19, 2005–%COMPANY(Pink Sheets:%SYMBOL - News), a contact center consulting and software development firm, today announced that Empire Research Associates has completed its initial report on the company, in which it recommends %SYMBOL as a “Strong Speculative Buy”. The report is an invaluable research tool for both shareholders and strong potential %INVESTOR.

In his report, William Walling, Chairman and Founder of Empire Research Associates, stated, “We are not yet prepared to present specific quantitative forecasts in this report. But, we sense that a 5% market share level in five years would be plausible (and probably conservative), if Central Authority(TM) catches on commercially. This could provide %SYMBOL with annual revenues in the area of $25 million.

At this level, profits would be juicy because software companies have high fixed costs and low variable costs, so rising incremental revenues pour down to the bottom line. Thus, a 40% margin on sales (fully taxed) would imply $10 million of net income in 2010. On the present 17.6 million shares, earnings would exceed $0.50 per share. Though inevitable future financing would necessarily dilute this amount, it would still be mighty attractive for a %STOCK currently selling at $0.075.

Zheesh. The company IS named later in the e-mail. Don’t you DARE ask me for it.